Be Careful Betting On Back-To-Office

MillerKnoll has joined the office party, but the market is missing formidable long-term risks

Highlights:

• Office stocks are soaring right now. Furniture company MillerKnoll has climbed 42% in less than two months.

• There’s a case for further upside: shares still look cheap, and guidance for fiscal 2024 suggests a bottom for earnings might be in.

• Looks can be deceiving, however. We see significant short-term and long-term risks to the bull case.

• Timing is tough. But traders looking to bet on a reversal of office optimism may consider shorting MLKN instead of more crowded trades in the REIT space.

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We’re putting out an extra post this week on a stock that interests both of us. I’ve been pretty bullish on MLKN but this post has changed my mind. Enjoy!

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Office plays are rallying — and it’s not just office REITs. Shares of office furniture manufacturer MillerKnoll MLKN 0.00%↑ are up 42% since June 1.

The rally makes some sense. Investors have decided that reports of the office’s death are greatly exaggerated. Over the past three months, office REIT SL Green SLG 0.00%↑ has rallied 46% and Vornado Realty Trust VNO 0.00%↑ 36%.